National Envelope, with a plant in Westfield, files for Chapter 11 bankruptcy protection

WESTFIELD -- The parent of National Envelope Corp., which has about 200 employees at its Westfield plant on Turnpike Industrial Road , has filed for Chapter 11 bankruptcy protection, according to published reports.

In a news release, the company said the filing was done to facilitate a sale. The Wall Street Journal reports the Chapter 11 filing wStamford, Conn.-based competitor Cenveo is a probable buyer. According to its website, Cenveo has a sales office here in Springfield. Cenveo’s only manufacturing facilities are in Asia, South America and Central America, however.

National Envelope is hoping to secure court approval for $67.5 million in bankruptcy financing from a lender group led by asset-management company Salus Capital, which National Envelope says will help fund its continued operations during the Chapter 11 process.

In a news release, CEO Jim Pinto said National Envelope will operate in the ordinary course of business during Chapter 11. Chapter 11 can give a business protection from its creditors while it reorganizes its finances; Chapter 7 bankruptcy involves liquidation.
Pinot blamed the bankruptcy on declining mail volumes and the lingering after-effects of the recession.

“We remain optimistic that the Chapter 11 filing will enable the Company to secure an owner committed to long-term viability for the business. While we continue to work on the sale process, we expect National Envelope will maintain normal operations and conduct business as usual. All of our plants are running and our focus continues to be directed at servicing our dedicated customer base with exceptional quality and on time delivery,” Pinot wrote in the news release.

Based in Frisco, Texas, National Envelope employs about 1,600 people and produces about 37 billion envelopes a year.

This will be National Envelope's second time through bankruptcy. It last emerged from bankruptcy protection in 2010.

Kimberly Lehere, director of marketing and communications for National Envelope, said there are now just more than 200 employees at the Westfield plant following two rounds of layoffs -- one in 2012 and one earlier this year. That employee total is down from more than 330 a year ago.

“Our hope is to find a buyer that is going to continue operating the business as is,” she said.

The company's roots in Westfield go back to 1920 as Old Colony Envelope. Old Colony later became part of International Paper Co. until it was bought by National Envelope in 1994.

In 2000, National Envelope completed a $6 million expansion to the Turnpike Industrial Road facility, which added 132,532 square feet to its original 100,000-square-foot facility there.

In July 2012, National Envelope received $319,000 in state income tax credits in exchange for investing $3.2 million in equipment and renovations at its Westfield factory. But the company never claimed the money and last month asked the state to release it from the agreement, said Jason Lefferts, director of communications for the state Executive Office of Housing and Economic Development. The project will not move forward.

Lehere said National Envelope was forced to walk away from the state development tax break due to the layoffs.

She reiterated that declining mail volumes, like people getting electronic bank statements instead of statements in the mail, is hurting the company. There is also an overabundance of envelopes on the market.

“It’s a commodity market. There are a lot of people making envelopes and prices are going down instead of going up while the price of everything else is going up,” Lehere said.